Amid marketshare gains by mobile phones that use Google's software and stiff competition from Samsung, Apple needs to re-establish its technology leadership, says UBS analyst Steven Milunovich in a report.

"Apple is driven to make beautiful products. Whether it is an iTV, wearable computers, or another new product category, we have faith that innovation is not dead," Milunovich wrote. "(In 2013) functionality upgrades — including fingerprint ID and/or facial recognition — could reopen Apple's competitive gap and increase share. We are less enthusiastic on the mobile wallet premise; however, we think an alternative to usernames and passwords could be highly disruptive."